TANKER tonne-mile demand is expected to rise sharply in the near term as Asia-Pacific refiners look for far-flung alternatives as a result of the conflict in the Middle East Gulf.

Shipowners are avoiding entry into the Middle East Gulf on safety concerns and difficulties in getting vessels insured.

The idea of diverting crude oil away from ports along the Strait of Hormuz is also being discussed by tanker brokers and owners, with three key pipelines being looked at.

The biggest is in Saudi Arabia, with crude oil being diverted from its East Coast to the West Coast port of Yanbu for export. The pipeline has a capacity of 7m barrels per day.

The Habshan-Fujairah Crude Oil Pipeline is also being looked at as a means to divert oil away from the port of Abu Dhabi on the Strait of Hormuz to the port of Fujairah on the Gulf of Oman, where crude oil can then be shipped to Asia.

A third possibility being looked at is the Iraq-Türkiye pipeline, which can move 1.6m barrels per day of crude oil. This will move crude oil from northern Iraq to Ceyhan, Türkiye. The pipeline was shut for three years before resuming operations late last year.

But indiscriminate attacks in the entire gulf have made these diversions risky. Shipowners are also choosing to sail around the Cape of Good Hope instead of the Suez Canal, ruling out the pipeline option for Saudi Arabian exports to Asia.

Asian refiners are now on high alert as Middle East Gulf crude oil imports look unlikely.

The Middle East Gulf is home to a significant portion of Asia’s crude oil imports. Vortexa data shows that Asia accounts for 83.4% of the Middle East’s crude oil exports. Saudi Arabia takes the lion share, accounting for 34.5% of exports heading to Asia. Iran on the other hand makes up 9%.

The hunt for alternative sources of crude oil is on, as refiners and shipping players remain uncertain of the duration of the conflict, and the scale of the impact it will have on global crude oil markets.

Oil on water and on land

Globally, Vortexa data shows around 58m barrels in short-term floating storage and 27m barrels in long-term floating storage.

In Asia, these stand at 34m barrels in the short term and 5m in the long term. The Middle East has 1.29m in the short term and 2.86m in the long term.

Total floating storage levels in Asia are significantly lower than the peak on December 25, 2025 at 123m barrels.

On land, big Asian crude oil importers are seeing a mix in terms of sufficiency of its oil reserves.

China’s current oil inventories have been pegged to last 90-100 days, with around 1.1bn-1.2bn barrels on hand according to estimates from consulting firm JKemp energy. Beijing does not post official numbers of its oil reserves.

China had recently been pivoting to Russian barrels, with teapot refineries losing out on Venezuelan barrels because of the US takeover. As a result, teapot refiners have resorted to heavily discounted Russian crude oil.

Indian oil minister Hardeep Singh in February said that its reserves can last 74 days or just over two months. This is equivalent to 4.1m tonnes of crude oil stock.

It has been increasing its dependence on the Middle East in recent months as it moved away from imports of Russian crude oil in hopes of inking a favourable trade deal with Washington.

India’s stockpile left more to be desired with Singh stating that “ideally, it should be 90 days”, as prescribed by the International Energy Agency. “I feel as the minister, safe with something at 74 days. But we can consider raising it going forward," Singh added.

South Korea and Japan are better placed than China and India with its stockpiles.

“Regarding supply, we can confirm that reserves of crude oil and petroleum products amount to 208 days’ worth, ensuring preparedness for a prolonged crisis,” said vice-minister of trade, industry and resources Moon Shin-hak.

Japan Prime Minister Sanae Takaichi confirmed that it has 254 days’ worth of oil reserve. But unlike South Korea, Japan has not made any decision to release its oil reserves while South Korea has.

“We will ensure a stable supply of energy to our country. Necessary measures will be taken promptly,” Takaichi told the National Diet.

The lack of supplies in India, and potentially China if tensions exacerbate over the next three months, has spurred the need for new crude oil import origins.

Distant sources to drive tonne-mile demand

With the stability of the MEG in question, Asian refiners will need to look for new sources to replace barrels lost to the conflict. These sources are likely to be distant, driving up demand for tonne-miles.

Vantage Shipbrokers sees Asian refiners looking at “Atlantic basin crude oil” as an alternative to Middle East barrels.

Indonesia this morning said that it would look at importing more US crude oil in the wake of MEG attacks.

Senior minister Airlangga Hartarto said: “The government already has Memoranda of Understanding to secure supply from non-Middle Eastern countries. Pertamina has signed MOUs with American firms Chevron and ExxonMobil.”

Hartarto did not deny the possibility of importing Russian crude oil when asked by reporters in Jakarta, saying “We will monitor what is available and from which country we can import.”

This is also a possibility for India, after it pivoted to Middle East crude oil in hopes of a better trade deal with the US.

Bloomberg reported that state-owned Indian refiners met over the weekend to discuss contingencies on the back of attacks in the Middle East. Russia was floated as an option in these discussions.

Other shipbrokers see steep discounts in Urals being a big value proposition for Indian refiners according to Vantage. A pivot from the Middle East to Russia would drive up tonne-mile demand for crude oil shipments to India.

Venezuelan crude oil could also be an option for Indian refiners who recently raised imports on the sidelines of a trade deal with the US. But this may not be a viable option for other Asian countries, given the extra requirements needed to process the heavy crude oil.

Another shipbroker sees China likely to continue importing Russian crude oil at the elevated levels that were seen in January. Canada also emerged as a potential alternative to the Middle East.

West African (WAF) crude oil is also being heavily considered by Asian refiners. But the competition here could be stiff, according to Vantage Shiprokers’ Research team. It also sees Opec spare capacity reaching its limit “to replace curtailed barrels” from the conflict.